Why is the law on access to infrastructure still not applied?

04-08-2017

Source: delo.ua.

The law on access to infrastructure came into force already two months ago. This document puts things in order when it comes to the relationship between operators and providers on the one hand and the infrastructure owners (buildings or transmission towers) on another hand. To make this law working, the government should adopt several subordinate acts by June. However, these documents have been adopted yet because of the opposition of two agencies.

There is one comprehensive problem, which has been hindering the development of fixed broadband Internet access (BBA) in Ukraine for many years – the access to infrastructure. The construction of a telecommunication network requires using the existing infrastructure: electricity supply pylons, cable drainage, buildings. However, until recently, there was no clear regulation of the conditions, under which owners of infrastructure facilities should provide telecommunications operators with the access to them.

Operators and providers have often faced with denials of access to infrastructure or with too high prices. This aspect negatively affected the development of the BBA, since a particular infrastructure facility is often non-alternative to build a network. These problems should be resolved by the law on access to infrastructure, which came into force on June 4,2017. 

However, the implementation of adopted provisions requires the approval of subordinate acts – the Rules and Methods of charging fees for access to each type of infrastructure. Specific working groups have been created in the relevant ministries with a purpose of their approval. But the process is much longer than expected – they should be approved a few months ago. Hleb Schehol, the lawyer of the IT and Telecom sector at the Better Regulation Delivery Office (BRDO) told Delo.UA why this happened. 

How was the law on access to infrastructure perceived by the telecom market? Were there any provisions that caused dissatisfaction of providers?

The law was developed by the relevant committee of the Verkhovna Rada, and it took into account most of the wishes of telecommunications operators. Associations and businesses support the innovations introduced by the law and look forward to its implementation.

And how was this law perceived by infrastructure owners?

Any business, and especially the Ukrainian one, has a negative attitude to the government’s intervention into its own activities. Monopolists try to avoid the state intervention, and the infrastructure owners, naturally, are the monopolists, some of them – at the level of apartment buildings and others – at the city or regional level.

Therefore, they give a hostile reception virtually to all restrictions imposed by the law.

The law obliges to provide economically feasible and equal access conditions for all participants that restricts the possibilities of monopolists to use their position for abuses.         

The Parliament made arguments that the law on access to infrastructure would allow the Internet providers to improve the quality of network coverage, develop business in the regions, ensure healthy competition and even reduce the cost of services. On the contrary, providers voiced the views that price ceilings established by the law were too high and end consumers would still pay more. Who of them is right?  

Today it is difficult to determine whether the tariffs are set too high or not: infrastructure owners refused to justify their own tariffs before the law entered into force. The adoption of tariff calculation methods is precisely aimed at improving this situation: owners will be obliged to disclose the costs associated with the additional load from telecommunication networks, and the tariffs will recover these expenses with a certain profit margin. Indeed, this will lower the network construction costs, which should make it economically viable to provide broadband Internet access services in low density areas. This, accordingly, will promote the development in regions.

Equal access conditions will also contribute to increased competition for sure. As for the growth or reduction of prices for end consumers: of course, they should not expect the growth since the law doesn’t oblige infrastructure owners to raise prices if they are lower than ceiling tariffs, only to reduce these ones, which are higher.

At the same time, of course, it is unlikely that providers will reduce existing tariffs for subscribers. However, they will have some “margin of safety” in case of rising expenses due to inflation, for example, that will allow them to keep stable tariffs for a longer time.

How did they get access to various types of infrastructure earlier? Who set the prices for specific infrastructure facilities? 

The access to infrastructure facilities has not been regulated prior the Law (with the exception of access to utility tunnels owned by operators / telecommunication providers).

The infrastructure owners set the fees for access as they wish.

For example, in this July, the PUC “Kyivmisksvitlo” required from telecommunications providers almost 300 thousand hryvnas (it is about 1 thousand hryvnas for connection to one transmission tower) for connection to its transmission towers at a site of 3 km.

What is specifically provided for in the draft Rules and Methods of charging fees for access to each type of infrastructure?

For example, the Rules will oblige owners to respond to requests in a clearly defined timeframe instead of delaying answers for “wrong” operators for half a year. In addition, the owners will have the right to refuse access only if there are no technical capabilities, which can be checked with the help of relevant expert organizations.

Previously, you could obtain a refusal without any explanation and justification.

Another document – the Methods – defines a mechanism to calculate and set the fees for access to infrastructure elements. That is, it indicates what expenses the owners can include into the calculation of the access cost and obliges them to show these calculations. Thus, it will be possible to estimate whether the ceiling tariffs are set too high or they are underestimated and to come to the economically justified prices. At the same time, the price calculated according to these methods will be the same for all participants that will develop the competition.

Why do the Ministry of Regional Development and the Ministry of Energy delay this process?

They start delaying already in the spring – the first working groups were created only in mid-May, some of them – even in late June. The law was published on March 4 and provided for the adoption of acts by June 4. Despite the regular meetings of working groups, the discussion of draft resolutions takes too much time since they discuss almost every point.

The representatives of companies that own infrastructure facilities and relevant ministries complain that the law is imperfect, it does not take into account their interests (although representatives of all interested ministries participated in the working group involved in drafting the law and the document itself was approved by the relevant ministries).

To tell the truth, the interest of infrastructure owners is in the possibility to independently approve decisions on access of a business entity to their own infrastructure and independently set the fee for access to this infrastructure.

For example, the representatives of infrastructure owners, which opinions are carefully considered by the relevant bodies, promote the following formulation of rules and methods, according to which the technical specifications should be issued for each infrastructure element. That is, a one-time fee for access to transmission towers to provide a network within one residential quarter can be more than 80 thousand hryvnas. If we support such a formulation, the price for BBA to the Internet will surely increase by times. Thus, we will preserve the letter of the law, but completely discredit the spirit of the law.

Did you contact Oleksandr Danchenko, who heads the relevant parliamentary committee, and the deputy head of the Presidential Administration Dmytro Shymkiv regarding delaying the adoption of subordinate acts, without which the changes will not work?

The implementation of the law on the development of rules and methods by the Cabinet of Ministers and central executive bodies was considered at the regular meeting of Danchenko’s committee on June 21. This revealed the problems of communication within the ministries: for example, representatives of the Ministry of Infrastructure understood the need to develop the relevant acts only during this meeting, although the BRDO representatives informed the ministry about their readiness to provide the results of their work and participate in the relevant working group a month before.

The committee’s meeting gave some impetus to the process of drafting regulations, but no document, even the ones approved by the working group, has not been proposed for public discussion, which should last at least a month before the adoption of the act, yet.

Interviewed by Irina Hudz     

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